Key facts
- Crude oil prices rose as President Trump signaled no intention to ease sanctions on Iran.
- Brent crude traded at $103.13 a barrel and WTI at $89.53.
- Middle East oil exports have recovered to nearly 80% of pre-war levels.
- Geopolitical risk premium remains embedded in prices due to uncertainty over sanctions relief.
- UBS commodity analyst Giovanni Staunovo noted that flows remain below pre-conflict levels, keeping the market undersupplied.
Oil prices edged higher as President Trump indicated no plans to ease sanctions on Iran, a significant oil producer whose exports have been heavily impacted. Brent crude was trading at $103.13 per barrel and West Texas Intermediate at $89.53, with both benchmarks poised for monthly gains. Brent was set for a roughly $10 per barrel increase, while WTI was on track for a $3 per barrel gain.
Earlier in the week, prices had seen a slight dip following reports that oil flows from the Persian Gulf had recovered to near pre-war daily averages. However, doubts persist about the sustainability of this recovery. Analyst Sugandha Sachdeva of SS WealthStreet noted that "Continued uncertainty over sanctions relief and negotiations is keeping a geopolitical risk premium embedded in prices." She added that while improving supplies might cap further gains, renewed disruption or escalated tensions could trigger another rally.
Data from Kpler indicated a strong rebound in oil exports from the Persian Gulf this month, with flows through the Strait of Hormuz alone reaching 13.2 million barrels daily, or 77% of pre-war levels. However, UBS commodity analyst Giovanni Staunovo pointed out that "Despite more vessel traffic through the Strait of Hormuz, flows remain below pre-conflict levels, keeping the market undersupplied." This shortfall, coupled with ongoing risks for tankers in the Strait of Hormuz, appears to be keeping oil prices elevated.